Olga Jimenez HCA 240 Variance Analysis essay

Olga Jimenez HCA 240 Variance Analysis essay. Olga Jimenez HCA-240 August 16, 2020 Mrs. Sharon Ingram Variance Analysis According, to the cost variance Analysis there are many key factors a health care manager needs to consider such as the problem recognition, Determination of the problem or cause, and correction of the problem. Many organizations have provided their employees ways to catch this unexpected cost variances ways to investigate it is “All variances that exceed an absolute dollar size (for example, $500), All variances that exceed budgeted or standard values by some fixed percentage (for example, 10%), All variances that have been unfavorable for a defined number of periods (for example, three periods), Some combination of the previous rules” (Cleverley, Song & Cleverley, 2011, para. 14). Some of this criterion values might be considered normal others subnormal is just up to management to consider which deviations need to investigate. However, variance reports will be useful for any health care Management position to minimize the cost in any given situation. While, still providing good quality and being able to report back to the vice president. Variance Analysis is a standard deviation of an actual observation this is how the financial department looks at prior period values and budget value. Some of these two standards to consider to used are prior period values and budget values. This helps explain why the cost variance analysis are different from budget values from other months. There are three major factors in the relevant analysis that play an important part in the relevant analysis are input prices, productivity of inputs, and output levels. Input prices are changing over time and are expected to increase with time this is why is important that the management is always looking for less expensive resources of supplies (Cleverley, Song & Cleverley, 2011). Productivity of inputs faces many challenges that it is hard to measure when someone will be ill, injured, disable. This makes it hard to asses productivity in healthcare “The ONS calculates productivity as a ratio of inputs to outputs, defining outputs as a weighted average of 16 types of care activity, such as hospital cases, visits to doctors, and ambulance journeys” (Berwick, 2005). This is reflected in the weight of the outpatient treatments. It is always important to explain why the numbers are not lining up to the budgeted cost. The report will explain the variance offset of these and the manager can adjust any changes before the end of the year if required. There are many factors that can contribute to these variances increasing and decreasing patient admissions, wages increase, supply utilization, acute surgeries, specialty care. Furthermore, one of the most challenging tasks is the budget for staffing in the example given it would cost about $5,580 a month for a head nurse to be employed, for a RN $45,000, LPN $19,400, Aides $23,040, Supplies $6,240 given a total expenditure of $99,300 a month. Leaving the manager to figure out if there is any over time accumulated this will bring the budget cost higher what will make it less expensive to leave a RN to do the extra hours or just have an aide to stay over an help were is needed if an RN is ask to do extra 5 hours of overtime it will cost her pay is $25 per hour /2 = 12.50+25= 37.50 (overtime pay) *5 =187.50 +45000=45187.50. In the long run those 187.50 will add up to be over budget deciding to lower the cost what is causing them to work overtime what is the time being use for can someone that is in a lower position take care of this to save money. What can be done to be able to complete this task faster but being safe and team work. Many of this things are be included in the report and be reported to the vice president.